Trans-Pacific Partnership trade agreement has started to take effect

The Trans-Pacific Partnership Agreement (now CPTPP) came into effect yesterday, 30 December 2018.

This ended many years of negotiations, the addition of a number of countries that totalled twelve when the agreement was first signed, but shrunk slightly to eleven when Donald Trump pulled the US out of it (the way he conducts international relations and trashes trade agreements and uses them as threats it is probably better the US is not trying to mess things up).

The government is predicting New Zealand exporters will be the first to benefit from the re-jigged TPP deal, which takes effect at midnight.

The Minister for Trade and Export Growth, David Parker, said tariffs in three significant economies – Japan, Canada and Mexico – start reducing immediately.

The new deal, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also comes into force for Australia and Singapore at midnight.

Mexico and Canada will cut tariffs further in a second round of adjustments on New Year’s Day, while Vietnam will make a double tariff cut when it joins the trade deal on 14 January, and Japan’s second round will be three months later on 1 April.

Mr Parker said the agreement will give a further boost to the competitiveness of New Zealand products in those markets.

“The CPTPP has the potential to deliver an estimated $222 million of tariff savings to New Zealand exporters annually once it is fully in force, with almost half of that – or $105 million – now available in the first 12 months,” he said.

One export to benefit is fish and fish products, which currently face tariffs of 20 percent into Mexico and up to 10 percent in Japan, Mr Parker said.

“The CPTPP will see all tariffs eliminated on fisheries exports, with the majority of savings from today.”

He said Marlborough wine producers will gain immediate duty free access to Canada.

In the South Island, Mid Canterbury seed farmers who produce 50 percent of the world’s radish seeds, will benefit from the elimination of tariffs on horticultural exports within 15 years under CPTPP.

And in the Otago region he said summer fruits would see big benefits.

“CPTPP will see total tariff elimination on summer fruits, including cherries, for which the tariffs into Japan will be eliminated within six years.”

Tokyo’s Asahi Shimbun newspaper reports that from today Japan will axe tariffs on kiwifruit, grapes and melons, and cut tariffs on imported beef from the current 38.5 percent to 27.5.

So it isn’t totally ‘free trade’, but it is a useful move in that direction.

Despite the benefits, National MP Todd McClay said the government needs to do everything it possibly can to bring the US back into the trade agreement.

“The government now needs to turn its attention to the US market, it’s the world’s largest consumer market, we haven’t got a trade deal with them, they need [the New Zealand government] to do everything they can to entice them back to the TPP and get better access for Kiwis for the US market”.

I don’t think it is worth the risk trying to get the US back into the CPTPP while Trump is President. He can’t be trusted to stick with trade agreements. He seems to think he can use agreements to threaten, and to renegotiate, at whim – as he has done with NAFTA. See “Either we build (finish) the Wall or we close the Border……”

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Gezza

Despite the benefits, National MP Todd McClay said the government needs to do everything it possibly can to bring the US back into the trade agreement.

“The government now needs to turn its attention to the US market, it’s the world’s largest consumer market, we haven’t got a trade deal with them, they need [the New Zealand government] to do everything they can to entice them back to the TPP and get better access for Kiwis for the US market”.

Um. Yeah. Ok Todd. I’m sure a tweet from Jacinda to The Donald will do the trick. FFS.